Natural Resources Committee on Nov. 28th, 2011

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Regarding the ecoENERGY program, can you give me an idea of the current demand?

[Mark Corey]

I'm sorry, but I didn't understand your question about demand.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Is this program used a lot? Are there enough funds? Is there a an "over-demand" for the ecoENERGY program?

[Mark Corey]

The ecoENERGY Retrofit—Homes program is very popular.

The government made a commitment to help up to 250,000 Canadians make net improvements to their houses. That is this year's goal and it's very popular.

This is the only program that targets individuals. There are many other research programs, with institutions, private companies and researchers.

With regard to the innovation program, we have received over 1,000 applications for our clean energy research program.

We can affirm that the programs are very popular.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

In 2010, there was an interruption in this program, for various reasons, probably linked to a lack of funding.

In 2011, will there also be an interruption in the program?

[Mark Corey]

We are presently in fiscal year 2011-2012. The government has undertaken to provide $400 million for the program. However, it's only for this year; there's no commitment for the coming year.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Day.

We go now to Mr. Calkins, for up to five minutes.

Go ahead, please.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Thank you, Mr. Chair.

I just want to follow up on a line of questioning. I assume that you guys were all in the room when I was talking when the minister was here. Just to put things back in context, obviously the strategic importance of having the ability to export oil and oil resources from Alberta is critical. The minister eloquently addressed the concerns I had when it came to the Gateway pipeline. And he addressed some of the concerns being addressed with regard to the Keystone pipeline.

We've been building pipelines in Alberta for years and years and years. We have a pretty good track record when it comes to having a safe, environmentally sensitive, and friendly way of transporting our energy resources. However, lately in Alberta I've noticed that diesel fuel is about 30¢ a litre more than gasoline, and it's because of an obvious refining-capacity issue. I get a lot of phone calls from constituents asking me specifically about this. The question that's often posed to me when we hear about these rejections or setbacks when it comes to the refining capacity on the Gulf coast is why we aren't refining more in Canada. Why aren't we building more of own upgraders and capacity here in Canada? Why aren't we, instead of piping it south, piping it to places where people need the work, such as Ontario, and so on? Why aren't we piping it to the west coast?

We can have long debates about policy. I know that you're not here to discuss the technical merits of policy, but I guess my question is, just for my own edification, the following. When was the last time we had any serious investments by the industry? What's keeping the industry from building more capacity for upgrading in Canada and in the United States, so that we have more of this product available?

[Mark Corey]

Mr. Chair, I could say a couple of things related to that.

It's the policy of the Government of Canada that decisions related to upgrading and refining are made in the private sector. There are a number of factors that come into play when the industry makes those decisions, particularly related to the oil sands.

There is a decision on whether they take the raw bitumen and upgrade it to what they call synthetic crude, and then on where synthetic crude goes to become refined product. What the industry looks at is the margin between what they can sell diluted bitumen for, and what synthetic crude sells for. Sometimes, if it in fact costs more to upgrade than the price of synthetic crude, there's no return on their investment, so they won't do it. If there's a big gap between the two prices, it's more worthwhile for the private sector to invest. We see the margins. Sometimes they get bigger; sometimes they get smaller.

There are other factors, as well. Sometimes, for example, refiners will prefer to be closer to the markets, because it's cheaper to transport, for example, crude oil by pipeline. I'm talking about the difference between crude oil and refined product. What comes out of refineries is gasoline, jet fuel, and diesel. Those are separate streams. They either have to batch them in the same pipeline, or they require dedicated pipelines. For example, some refineries will have a pipeline that will go directly from the refinery to a nearby major international airport, which is the case in a number of cities.

A third factor is that gasoline varies, depending on temperature and the region of the country. The gasoline you put in your car in the winter is a slightly different blend from what it is in the summer. Of course, the difference between Texas and Ontario at different times of the year can be considerable. Gasoline refineries will actually tailor their product to the local market. That's another reason that the refiners, rather than shipping refined products long distances, will choose to be a little closer to the markets.

Another factor is that crude oil is more easily shipped long distances than gasoline, for example, because impurities getting into gasoline can be a major problem. Sulphur, for example, can get in. You have to clean it out at the other end. It's not as much of a problem when you're dealing with crude.

The final thing is the cost of infrastructure. A lot of the oil that would move, for example, down the Keystone XL pipeline would be moving to refineries on the Gulf coast, where they're already set up to do heavy crude. Just as a matter of reference, the price of a new refinery for 250,000 to 300,000 barrels a day can be in the range of $7 billion to $8 billion. They have existing refinery capacity already set up to deal with heavy crude. Oil sands oil is heavy crude. A significant investment like that is one of the commercial reasons for moving it to those refineries.

As an example, if you're moving a refinery from dealing with light crude to heavy crude, you need to introduce a coker. One of those can be worth $2 billion. It's a very capital-intensive business. What happens a lot of times is that the crude will go to the refining capacity, which again is a decision we leave in the hands of the private sector.

Those are some of the factors behind the private sector's investment decisions.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Calkins.

We'll go now to Mr. Allen for up to five minutes. Go ahead, please.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you very much, Mr. Chair.

And thank you, witnesses, for being here.

I want to follow up on one of the questions I asked in the first segment associated with the $200 million for Chalk River. Which parts of that funding address the continued isotope production, and what is meant by “addressing legacy costs associated with the wind-down of the Dedicated Isotopes Facility”? Is that the MAPLES?

[Cécile Cléroux, Assistant Deputy Minister, AECL Restructuring, Department of Natural Resources]

Of the $200 million, there is about $35 million for the isotope production, and it includes the costs related to finishing the work to mothball the MAPLES. So overall it's about $35 million of the $200 million.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

That's $35 million for both of those activities?

[Cécile Cléroux]

Yes, both of these activities.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Is the total cost for the redevelopment of the Chalk River isotope facility included already, in terms of the reactor work that had to be done?

[Cécile Cléroux]

In 2011-12 we have no costs related to the NRU. The NRU has been back in service since August 2010--

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Correct.

[Cécile Cléroux]

--so it does include the cost of operating the NRU and supplying the isotope production. That is included in the $35 million I mentioned.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Okay, thank you very much.

I want to follow up on one of the comments that was made on forest certification. I think Mr. Anderson asked about that.

How do we compare with other countries on the certification of our forests? I do know that when we were doing our study before, Russia was actually going to stop exporting logs, and that type of thing, and we felt there was a big advantage for us in our certification efforts for international markets. What is your impression of how we compare with other countries on certification?

[Tom Rosser]

On certification of sustainable forest management practices, Canada is unambiguously the global leader in terms of the number of hectares certified. I'm quoting from memory, but my recollection is that Canadian forests account for something like 40% of the global number of hectares certified. It's something, as I said, in which we are a global leader. In the marketing and branding of Canadian forest products, certainly the sustainability attributes of products are becoming increasingly important in the global marketplace. Being able to demonstrate that our products meet the highest standards of sustainable forest management is a key competitive advantage.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

I want to ask a question about the pulp and paper green transformation fund. I know there's a significant fund—something like a billion dollar fund—that has been set up.

Can you tell me a little about the disbursements of that? I know there have been a few projects that have been approved, at least for one of the businesses in my riding—and in New Brunswick as well. Can you talk about the current status of the disbursements of the funds in the pulp and paper green transformation program?

[Tom Rosser]

As you alluded to, it's a $1 billion program over three years, so it will end at the end of this fiscal year—that is, in the 2011-12 fiscal year.

We anticipate that all, or virtually all, of the moneys allocated under that program will be utilized to support capital investments in the pulp and paper mills across the country that have a demonstrable environmental benefit. To date we have seen investments, I believe, in 34 or 35 communities in 8 provinces across the country. They have had a real impact in terms of improving the sustainability of Canada's pulp and paper industry.

We've seen a reduction in greenhouse gas emissions from the industry of about 10% as a result of investments made by the program. We've seen 1.6 million kilowatt hours of green power being generated by the industry, which, to put it into context, is enough electricity to power a city the size of Quebec City. There have been significant improvements in energy efficiency, and in addition to electricity generation, there have been significant increases in thermal energy generation from bioenergy and other renewable sources.

It's a program that's had a significant impact on lessening the environmental footprint of the industry, and also in terms of improving its sustainability and competitive performance.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

How much time do I have left?

[The Chair, Conservative, Leon Benoit]

Just a short question.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Can you talk to me a bit about the funding for the renewal of the genomics research and development initiative? It was $1.8 million. What is the total value of that program, and how long does this extension carry us for?